Should EPA credit early action taken by states to reduce carbon emissions? If so, how?

Under the Clean Power Plan, the United States will finally have Clean Air Act standards to address carbon pollution from existing power plants. During the long wait for these standards, a diverse group of states and companies have acted, leading the way in reducing carbon pollution. They have done so by deploying renewable energy, harvesting demand-side energy efficiency, and by shifting utilization away from high-emitting and toward lower-emitting power plants.

State and private sector leadership in addressing pollution is something that should be recognized and supported. Action at the federal level to address climate-destabilizing pollution is lagging perilously far behind the scope and pace of action that scientists tell us is necessary to mitigate harmful climate impacts and reduce the risk of catastrophic climate change. For these reasons, we have long supported the recognition of early action in the context of the Clean Power Plan. Yet the question of how to do so is complex.

Under Section 111(d), EPA identifies the “best system of emission reduction” available to address dangerous air pollution from stationary sources, and sets emissions performance targets achievable using that best system. This framework—like other frameworks under the Clean Air Act—looks at existing pollution problems and how they can be addressed going forward. It does not provide for an assessment of past emissions reductions by those sources (or that state).

Of course, under the Clean Power Plan, states and companies that have already transitioned toward lower-carbon and zero-carbon energy and energy efficiency are closer to the full deployment of the best system of emissions reduction than others—and EPA should consider clarifying that states that go beyond their targets under the Clean Power Plan would receive credit for those actions under future updating of the carbon pollution standards for power plants.

The years between 2012 and 2020 present a distinct quandary. EPA uses 2012 data on power sector infrastructure in assessing the potential for emissions reductions to be secured under the best system during the 2020 to 2029 compliance period. Crediting emissions reductions secured between 2012 and 2020 would encourage states and companies to act earlier, moving emissions reductions forward in time. All else being equal, earlier action to reduce emissions is certainly better than later action. But the potential to reduce carbon pollution during 2012 to 2020 was not taken into account in setting the state targets. As such, giving compliance credit to those actions taken during this time that would have happened regardless of the Clean Power Plan—take, for example, renewable energy deployed under a renewable energy standard in a state strongly committed to clean energy—would create a bank of compliance credits. Those banked credits would be used by that state during the compliance period in the place of other, beyond business-as-usual actions to reduce emissions—and the overall emissions reductions achieved by the Clean Power Plan would be reduced by the same amount.

There are, of course, highly compelling reasons to begin to take action now to reduce carbon pollution. States and companies can take advantage of the five years between the finalization of the standards and the beginning of the compliance period to gradually build out renewable generation and build up energy efficiency programs so that these resources are ready to deliver carbon reductions. The reductions in co-pollutants that will result will help states deliver cleaner air for their citizens and meet other clean air standards. Companies can develop business models built on a foundation of clean energy and efficiency, and investments in cleaner energy and efficiency will create jobs. Improvements in energy efficiency will cut utility bills for homes and businesses, and spending those savings in their communities will stimulate the local economy. These are simply common sense actions, with tremendous co-benefits—and the existence of an initial compliance date for the long-awaited carbon pollution standards does not alter that common sense.

The proposed Clean Power Plan identifies the “best system of emission reduction” to address carbon pollution from power plants as comprised of four building blocks: (1) efficiency improvements at coal-fired power plants; (2) shifts in utilization away from higher-emitting fossil plants towards lower-emitting fossil plants; (3) deployment of zero-carbon generation sources such as wind and solar; and (4) harvesting demand-side energy efficiency improvement opportunities.

This system best satisfies the statutory command of the Clean Air Act, which directs EPA to identify the system that maximizes emissions reductions, considering cost and impacts on energy and other health and environmental outcomes.

This system also reflects what is happening across the country (and indeed, around the world) to reduce carbon pollution—states and companies are using the interconnected electric system as a whole to cut carbon pollution, deploying zero- and low-emitting generation and reducing reliance on high-emitting generation, and doing so flexibly to ensure that reliability is maintained and emissions reductions are achieved cost-effectively.Fifteen states wrote to EPA Administrator Gina McCarthy as the Clean Power Plan was being developed to describe the success they have had in deploying this system, cutting carbon pollution from power plants by 20 percent between 2005 and 2011, with some states achieving reductions of over 40 percent during that period.

Renewable energy is our future.

More than 60,000 megawatts of wind energy capacity have been installed in 39 states and an additional 12,000 megawatts are under construction. Wind power capacity in the United States has increased nine times over since 2005, supporting over 80,000 jobs and driving a new manufacturing sector with over 550 facilities across the country. Solar generating capacity is also rising rapidly—increasing by 418 percent between 2010 and 2014. PG&E has connected more than 100,000 customers with solar panels to the grid, saving the average residential customer with solar panels $130 a month. Costs of renewable generation have been falling rapidly, and power companies such as Xcel, DTE, MidAmerican, Georgia Power, and Austin Energy have announced renewable energy purchases that are outcompeting fossil-fueled alternatives and that will lower customer bills by saving fuel costs.

The Clean Power Plan’s assessment of the potential for renewable energy to reduce carbon pollution bases state targets on an average of existing renewable energy policies in different regions of the country. By taking this approach—effectively looking backward—the proposal fails to reflect the dynamism in renewable energy deployment that is happening across America, and fails to satisfy Section 111’s technology-forcing framework.

The proposed alternative approach, which would consider the technical and economic potential to harvest renewable energy in each state, has the potential to better reflect the country’s vast renewable energy resources. The analysis underlying the alternative approach needs to be updated to reflect current technologies (such as taller wind turbines and distributed generation) and current costs (which are falling rapidly).

An up-to-date analysis of the technical and economic potential for renewable energy to cut carbon pollution will provide a strong legal and technical foundation for the Clean Power Plan, and help facilitate our transition to the clean energy–fueled economy of the future.

The Attorney General’s challenge was flawed because it was filed only one week after EPA published proposed carbon emission standards for new power plants, in January 2014.

But the law is this case is clear and anchored in common sense.

As the court explained, legal challenges may only be brought against final standards:

Simply stated, the State cannot sue in federal court to challenge a rule that EPA has not yet actually made. (Decision, Page 1)

EPA’s proposed action is still in draft form and has been the subject of extensive public comment.

In December 2012, the D.C. Circuit rejected a similar challenge to EPA’s original proposal for the very same reason — that the standards had yet to be finalized.

This latest attempt at an end run around the Clean Air Act would have deprived the public of a chance to comment on a proposed rule and present its diverse viewpoints to the agency. Moreover, for a court to review standards that are still being developed would be a waste of judicial resources and Americans’ tax dollars.

The court also noted a defect in the Nebraska Attorney General’s central legal claim.

The Attorney General argued that EPA’s reliance, in part, on data from facilities receiving federal assistance was unlawful.

The court explained:

The merits of this claim are not before the Court. But the Court notes that [Energy Policy Act section] 402(i) only forbids the EPA from considering a given technology or level of emission reduction to be adequately demonstrated solely on the basis of federally-funded facilities. 42 U.S.C. [section] 15962(i). In other words, such technology might be adequately demonstrated if that determination is based at least in part on non-federally-funded facilities. (Decision, Footnote 1, Page 5)

Unfortunately for the citizens of Nebraska, Attorney General Bruning is devoting precious taxpayer resources to misguided legal attacks.

It’s not the only way in which Nebraska’s taxpayer dollars are being deployed to block vital clean air progress for our nation.

The Guardian reported that Bruning, on a conference call organized by the American Legislative Exchange Council (ALEC), told other state attorneys general that Nebraska has challenged EPA authority more than 30 times and will keep on doing so.

Yet the Carbon Pollution Standards for new power plants have won broad public support from millions of Americans — including public health associations, Moms Clean Air Force, faith-based organizations, the League of United Latin American Citizens, and leading power companies.

Nebraska’s failed lawsuit is just one more misguided attempt to prevent vital limitations on the carbon pollution emitted by power plants from moving forward.

The bedrock legal authority underlying the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan is broadly recognized — by our nation’s highest court, states, power companies, academic experts and the EPA General Counsel serving during the President George H.W. Bush administration.

In Massachusetts v. EPA (2007), the Court held that carbon dioxide is a pollutant under the Clean Air Act. Then, in AEP v. Connecticut (2011), the Court explicitly recognized EPA’s authority to limit emissions of carbon dioxide from power plants pursuant to section 111, and acknowledged the agency’s ongoing efforts to do so.

Even before AEP was decided, however, legal researchers and academics had identified section 111 as a promising avenue for regulating carbon pollution from power plants and industrial facilities:

A 2009 report by the Congressional Research Service found that “Section 111 appears to provide a strong basis for EPA to establish a traditional regulatory approach to controlling greenhouse gas emissions from large stationary sources.”

A 2010 paper by Duke University’s Nicholas Institute for Environmental Policy Solutions observed that “[S]ection 111 appears to provide the EPA with the best means to create a system that … implements a cost-effective program that delivers meaningful emissions reductions, is consistent with both the statutory language of the Act and legal precedent, and is politically viable.”

A 2011 survey of the academic community found “widespread agreement” that “[section] 111 authorizes the use of many types of flexible approaches” to regulating carbon pollution.

Indeed, states, power companies, and other stakeholders have all recently analyzed and supported EPA’s authority to limit carbon pollution from power plants:

Kentucky recognized EPA’s role in setting the benchmark that states will have to meet under section 111.

Pennsylvania said that section 111 was the “most appropriate” provision for regulating carbon dioxide emissions from power plants.

The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative “recommend[ed] that EPA use its authority under section 111 of the Clean Air Act to ensure significant overall reductions in carbon emissions."

Fifteen states from across the country agreed that “EPA needs to seize [the] opportunity [for pollution reduction] because Section 111(d) standards are to be based on the ‘best system of emission reduction,’” including energy efficiency and renewable energy.

The Clean Energy Group, whose members include some of the largest generators of electricity in the country, noted that “EPA has significant discretion under section 111(d) in determining both the appropriate level of the standards for existing power plants, as well as the form of the regulations.”

Environmental law experts have also analyzed and endorsed EPA’s authority to regulate carbon pollution from power plants:

UCLA Law Professor Ann Carlson said “[I]t is important to be clear here: the President is required to issue the rules, required by law and by the interpretation of the law by the highest Court in the land.”

Harvard Professor Jody Freeman called critics’ claims to the contrary “weak,” explaining that “[t]he record clearly shows that Congress intended to ensure that harmful pollutants from existing power plants could not entirely escape regulation. These emissions qualify for regulation under 111(d) because they are not covered elsewhere in the law and account for nearly 40 percent of the nation’s total emissions of carbon dioxide, the principal driver of global warming.”

E. Donald Elliott, EPA General Counsel under President George H.W. Bush, noted that “the Supreme Court and other courts have upheld EPA’s authority to address this issue,” and “[a] system-wide approach provides needed flexibility and reduces costs, as well as encouraging investment in lower-emitting generation. EPA has wisely left the states a lot of discretion rather than mandating specific measures as some had wanted…”

Carol Browner, EPA Administrator during the Clinton administration, wrote that “EPA has authority under the 1990 Clean Air Act, an authority affirmed by the U.S. Supreme Court, to set these public health protections against carbon pollution.”

Finally, Leon G. Billings, who was the principal staff author of the Clean Air Act of 1970, shared his personal knowledge of the statute:

Critics of the move say that President Obama is making an end run around Congress, stretching the law to achieve by executive action what he could not accomplish through the legislative branch … This is flat wrong. More than four decades ago, Congress expressed its clear desire to regulate pollution from power plants, in the form of the Clean Air Act. I know, because I worked on the legislation, including the key part of the act — Section 111 — that the Obama administration is using to justify its move.

The legal community broadly recognizes EPA’s authority and obligation to address carbon pollution emitted by power plants. This is perhaps unsurprising, as all these statements simply echo what the Supreme Court has already held — that EPA’s efforts to reduce carbon pollution from power plants are firmly grounded in the law.

Earlier this week, our nation took a ground-breaking step by proposing to finally establish carbon pollution limits on existing power plants — the single largest source of climate-destabilizing pollution in the U.S. and one of the largest in the world.

We have national limits on the other air pollutants emitted by these plants, including mercury and arsenic and smog-forming pollutants — and we urgently need to secure strong limits on carbon pollution.

Here’s a first look at the proposed Clean Power Plan and its “building blocks” — the opportunity for state leadership, the profound public health benefits for our communities and families, and the good news about cost savings for customers.

The Proposed Pollution Reductions

The Clean Power Plan would reduce carbon pollution from existing fossil fuel-fired power plants by approximately 30 percent by 2030, and could curb emissions by as much as 27 percent by 2020.

EPA looked at the existing power plants in each state, and evaluated four time-tested, cost-effective emission reduction pathways:

The potential to improve power plant efficiency

The potential to rely more on lower-emitting power plants such as combined cycle natural gas and less on higher-emitting power plants

The potential to deploy zero emitting generation resources like wind and solar

The potential to capture end-use energy efficiency opportunities.

EPA then added up these four “building blocks” to calculate the reduction that a State could achieve on average in its overall emission rate over 2020-2029 (the “interim” target), and what rate could be achieved in 2030:

State

2012 Emission Rate (Fossil, Renewable, and 6% Nuclear) (lbs/MWh)

2020-2029 Interim Goal (lbs/MWh)

2030 State Goal (lbs/MWh)

Percent change from 2012 rate

Alabama

1,444

1,147

1,059

-27%

Alaska

1,351

1,097

1,003

-26%

Arizona

1,453

735

702

-52%

Arkansas

1,640

968

910

-45%

California

698

556

537

-23%

Colorado

1,714

1,159

1,108

-35%

Connecticut

765

597

540

-29%

Delaware

1,234

913

841

-32%

Florida

1,200

794

740

-38%

Georgia

1,500

891

834

-44%

Hawaii

1,540

1,378

1,306

-15%

Idaho

339

244

228

-33%

Illinois

1,895

1,366

1,271

-33%

Indiana

1,923

1,607

1,531

-20%

Iowa

1,552

1,341

1,301

-16%

Kansas

1,940

1,578

1,499

-23%

Kentucky

2,158

1,844

1,763

-18%

Louisiana

1,466

948

883

-40%

Maine

437

393

378

-14%

Maryland

1,870

1,347

1,187

-37%

Massachusetts

925

655

576

-38%

Michigan

1,696

1,227

1,161

-32%

Minnesota

1,470

911

873

-41%

Mississippi

1,130

732

692

-39%

Missouri

1,963

1,621

1,544

-21%

Montana

2,245

1,882

1,771

-21%

Nebraska

2,009

1,596

1,479

-26%

Nevada

988

697

647

-34%

New Hampshire

905

546

486

-46%

New Jersey

932

647

531

-43%

New Mexico

1,586

1,107

1,048

-34%

New York

983

635

549

-44%

North Carolina

1,646

1,077

992

-40%

North Dakota

1,994

1,817

1,783

-11%

Ohio

1,850

1,452

1,338

-28%

Oklahoma

1,387

931

895

-35%

Oregon

717

407

372

-48%

Pennsylvania

1,540

1,179

1,052

-32%

Rhode Island

907

822

782

-14%

South Carolina

1,587

840

772

-51%

South Dakota

1,135

800

741

-35%

Tennessee

1,903

1,254

1,163

-39%

Texas

1,298

853

791

-39%

Utah

1,813

1,378

1,322

-27%

Virginia

1,297

884

810

-38%

Washington

763

264

215

-72%

West Virginia

2,019

1,748

1,620

-20%

Wisconsin

1,827

1,281

1,203

-34%

Wyoming

2,115

1,808

1,714

-19%

State Flexibility & Innovation

Under the Clean Power Plan, states will control their own future.

States have the flexibility to deploy the emission reduction policies and pathways that make the most sense for them, maximizing cost-effectiveness and co-benefits for their citizens, so long as they achieved the required emission reductions.

Some states might choose to build their compliance plans around existing Renewable Energy Standards and energy efficiency programs. Others might choose to put in place an emission reduction trading program between power plants. Still others might choose to collaborate with other states to submit joint plans and capture the cost-effective emission reduction opportunities available across state boundaries.

Public Health Benefits

The public health benefits of the Clean Power Plan are extensive and will help ensure healthier and longer for our loved ones who suffer from heart and lung ailments, and for our children.

EPA’s analysis shows that the reductions in carbon pollution and the associated reductions in sulfur dioxide, oxides of nitrogen, and particulate matter that will happen as a result will generate health benefits of $55 to $93 billion per year in 2030.

The pollutants that contribute to the soot and smog that make people sick will be reduced by more than 25 percent in 2030 — avoiding 2,700 to 6,600 premature deaths and 140,000 to 150,000 asthma attacks per year.

From the soot and smog reductions alone — ignoring the important reductions in carbon pollution achieved — Americans will see 7 dollars in health benefits for every dollar invested through the Clean Power Plan.

Cleaner power will ensure healthier and longer lives for millions of Americans.

Electricity Rates & Reliability

EPA’s analysis also shows that there will be sufficient power generation capacity across the United States under this framework to meet demand.

The flexibility provided to States will allow them to design plans to secure reductions in carbon pollution without any risk to power reliability. As has been true for the past 40 years, we will reduce air pollution and maintain reliable power.

Because the Clean Power Plan will spur investments in demand-side energy efficiency, in 2030 electricity bills are expected to be 8 percent lower than they would have been without the plan.

Under the Clean Power Plan we will have cleaner, safer power, lower electricity bills, cleaner air, and healthier lives.

One year ago this June, President Obama directed the Environmental Protection Agency (EPA) to develop Carbon Pollution Standards for existing power plants — a key component of his Climate Action Plan.

The President charged EPA with launching the effort "through direct engagement with States, as they will play a central role in establishing and implementing standards for existing power plants."

Congress laid the groundwork for this dynamic federal-state collaboration in 1970 when it provided for national environmental performance standards for sectors that are major sources of dangerous air pollution.

Under this program (Section 111(d) of the Clean Air Act) EPA identifies the "best system of emission reduction" available to address dangerous air pollution from existing pollution sources through performance standards, adopted after public notice and comment, called "emission guidelines." 1

EPA quantifies the emission reductions that can be achieved using this "best system" — and that becomes the performance benchmark for state plans which implement and enforce standards of performance for the existing sources of pollution in each state. 2

Congress provided for state plans to be submitted to EPA to evaluate whether the plan provides for emission reductions that are equivalent to or greater than those under the "best system." 3 Congress made clear that states are not required to use the particular system identified by EPA — they have the flexibility to use other systems, tailored to their state, so long as they achieve an equivalent or greater level of pollution reduction.

Under the timeline set out by President Obama, EPA will propose guidelines for emissions from existing power plants at the beginning of June, and finalize them by June 2015.

Consistent with the long-standing implementation timetable under this Clean Air Act program, states will submit their plans to implement and enforce standards by the end of June 2016.

Section 111(d) standards have long been effective in addressing dangerous air pollution from a variety of source categories and can be designed to provide a flexible and cost-effective framework for reducing carbon pollution from power plants.

For decades, section 111(d) has provided the foundation for pollution cuts from major sources of air pollution. Toward the end of the 1970s, EPA and the states put section 111(d) to work, publishing and implementing emission guidelines for fluorides from phosphate fertilizer plants (1977),4 sulfuric acid mist from sulfuric acid plants (1977),5 sulfur from kraft pulp mills (1979),6 and fluoride from primary aluminum plants (1980).7

These emissions guidelines and the state-devised standards implementing them would achieve dramatic reductions of harmful air pollutants, eliminating 75 percent of overall nationwide fluoride emissions from phosphate fertilizer plants,8 almost 80 percent of sulfuric acid emissions from an uncontrolled sulfuric acid plant,9 82 percent of overall nationwide total reduced sulfur from kraft pulp mills,10 and up to 78 percent of fluoride emissions from the primary aluminum industry.11

The pollution from fossil fueled power plants, one of the single largest sources of dangerous air pollution in our nation, has been subject of clean air standards under section 111 since the advent of the modern Clean Air Act in 1970.12 National standards of performance under section 111 have applied to newly constructed power plants and existing plants that are revamped and reconstructed.

The flexibility that the Clean Air Act provides in establishing and implementing standards of performance for existing sources under section 111(d) is well suited for the regulation of carbon pollution from fossil fuel power plants.

Congress created a framework under section 111(d) to address pollution from existing power plants that can be flexible and expansive in scope where such a framework could be more effective in addressing emissions.

The statutory language — "best system of emission reduction" — is broad, and not defined in the statute. The ordinary meaning of the word is expansive — "a complex unity formed of many often diverse parts subject to a common plan or serving a common purpose."13 Throughout the Clean Air Act, Congress has used the word "system" to describe innovative, flexible regulatory approaches such as the acid rain emissions cap and allowance trading program, and marketable permits.14

Indeed, the legislative history of the section over the years is consonant with this broad reading of the term "system," especially for section 111(d).

When Congress amended the Clean Air Act in 1977, it altered the definition of "standard of performance" as applied to new sources in order to require new sources to deploy the "best technological system" of emission reduction. But, pointedly, it left the corresponding definition for existing sources intact15 and even explicitly confirmed that "systems" of emission reduction for existing sources were "not necessarily technological."16

In 1990, Congress abandoned this special limitation for new sources and reverted to the broad, unified definition of section 111 "standards of performance" for both new and existing sources.17

Thus, EPA can deploy a systemic approach to reducing carbon pollution from power plants, looking beyond each individual source in isolation to find the "best," most cost-effective system for reducing pollution.

It has done so several times before. In the 1995 emission guidelines for municipal waste combustors, EPA authorized states to create averaging and trading programs in reducing emissions of nitrogen oxides.18

In the context of greenhouse gas emissions, which do not have local effects, an averaging approach allows cost-effective emission reduction opportunities to be captured while rigorous overall emission reduction targets are achieved.

Not only may EPA allow averaging of emissions among existing sources as part of the "best system of emission reduction," but it can also consider pollution-reduction measures that are implemented beyond the source and secure reductions in emissions at the source.

For example, in the 1997 emission guidelines for hospital/medical/infectious waste incinerators, EPA required state plans to include waste management plans, where feasible, to eliminate part of the waste stream going to the incinerator that would produce harmful emissions.19 In that context, part of the "best system of emission reduction" involved measures taken well outside of the source’s boundaries that could reduce harmful emissions from the sources.

EPA could take a similar approach to address carbon pollution from existing power plants — as deploying demand side energy efficiency and renewable energy can be some of the most effective means of reducing harmful emissions from existing plants while capturing the greatest co-benefits in cutting utility bills, creating jobs, making state economies less dependent on price fluctuations in fossil fuels, and stimulating local economies.

States have extensive experience in implementing emission guidelines and other system-wide approaches under the Clean Air Act, and are well positioned for developing and implementing plans to address carbon pollution from existing power plants under Section 111(d).

The next two parts of this series will look at the impressive achievements of states and power companies across the country in in cutting carbon pollution through flexible, cost-effective, demonstrated policies that are reducing utilization of high-emitting plants, expanding renewable energy capacity, and improving the efficiency with which we use energy.

Through the dynamic state-federal collaboration provided by section 111(d), the Carbon Pollution Standards for existing power plants will build on this foundation and help us make further progress along the path toward a cleaner, safer energy future.